Simon Properties Group – Real Estate and Retail

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SWOT Analysis- Simon Property Group

Angel Bloodworth

MGT 450

University of Arizona

28 March 2022

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A SWOT analysis is a framework for analyzing a company's competitive position in its

industry. It provides critical information on both internal and external factors that may

impact an organization's ability to succeed. The tool can help an organization improve

performance, identify new opportunities, maximize return on resources invested, and

mitigate various business and policy risks.

SWOT Analysis

Strengths

The word "strengths" refers to the beneficial internal activities, habits, and processes

inside a corporation. Those are the aspects that contribute to the success of the firm and the

success of its brand (Quezada et al., 2019). Strengths are important because they will provide

Simon Property Group with the right tools to solve the existing challenge (Financial crisis).

i. Reach and distribution. Simon Property Group is supported by a

comprehensive distribution network that guarantees its items are easily available

to many customers on time. SPG has risen to become one of the most recognizable

retail brands globally due to its innovation and one-of-a-kind merchandise (Lin et

al., 2017). This particular strength means that the company has a strong brand in

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the market that can help attract a huge amount of money to help the company

solve its financial crisis.

ii. Financial Position. Simon Property Group has a strong financial position, with

a history of steady profitability and profit reserves that can be used to support

future capital expenditures. Simon Property Group is well-positioned to meet its

long-term goals. Most of the company's income comes from the return on capital

expenditures made in the past on various initiatives. Furthermore, the company

has a large asset base, contributing to its ability to remain viable (Burayidi & Yoo,

2021). The fact that the SPG is in good financial standing shows that it has received

a consistent stream of positive returns over an extended period. In this case, the

firm can use a portion of its income to pay off debts that it has accrued over the last

two fiscal years. Furthermore, since the company has a large asset base, it may be

able to use these assets as collateral to get loans rapidly to resolve its financial

woes.

iii. Skilled labor force. A great amount of money has been invested in staff

training, resulting in many highly skilled and motivated employees at SPG. The

company's staff comprises people from a diverse range of geographical, ethnic,

cultural, and educational backgrounds (Watson, 2016). Using this authority, the

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company can ensure that skilled employees aid the firm in introducing new ideas

and ways of doing things, especially in solving the current financial problem.

Weaknesses

Weakness in an organization is a limitation, shortcoming, or defect that inhibits the

organization from achieving its objectives and achieving its goals. When a company's

weaknesses are present, it cannot achieve its full potential. Those are the areas where the firm

has to improve to remain competitive (JATMIKO et al., 2021). Identifying weaknesses will help

Simon Property Group identify areas of improvement in regard to the current problem it is

facing. Doing this will allow SPG to design measures to rectify and manage its weak points,

which will help the company prosper.

i. Research and Development. Although SPG spends more on research and

development than the industry average, it spends far less than a small number of

businesses that have earned a significant competitive advantage due to their

innovative ways.

ii. Market dependability. SPG is primarily dependent on the markets in the

United States, with sales in the country accounting for around 87 percent of total

revenues (Sutherland, 2018). Although it has extended its operations in Asia, it is

still predominantly dependent on the North American market. SPG's income and

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operational resources might be jeopardized if the American economy experiences

another downturn, which would be catastrophic for the company. SPG must

diversify into other markets to avoid probable failures in the case of a downturn in

the US economy.

iii. Low current ratio. The company's current ratio is lower than the industry

standard, meaning it could face challenges meeting its short-term financial

obligations. This might indicate that the company will have liquidity challenges in

the future.

Opportunities

Opportunity refers to any favorable circumstance that exists in the organization.

Opportunities are defined as external factors that have the potential to provide a firm with a

competitive advantage over its competitors. In this case, by identifying the opportunities,

Simon Property Group will be in a position to understand areas where it can capitalize to

solve its current problem.

i. E-commerce. The e-commerce industry has seen a new trend and a rise in sales.

As a result, many customers are opting to make purchases online rather than in

person. Simon Property Group may be able to create revenue by developing online

stores and selling their products through them.

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ii. Social Media. The number of individuals who use social media has increased

dramatically throughout the world. Facebook, Twitter, and Instagram are the three

social media platforms that have had the biggest increase in monthly active users

over the last five years (Toscani, Tosin & Zanella, 2018). Simon Property Group can

use social media platforms to promote its products, communicate with customers,

and solicit feedback.

iii. Technological advancements. Technology offers several benefits in a range

of different industries. Technology makes it easy for SPG to collect more accurate

information on customers and increase marketing campaigns' effectiveness.

Threats

Threat refers to a situation that has the potential to create significant financial harm.

Identifying threats is important for Simon Property Group because it will provide the

management with insights on possible threats and ways to counteract them. This will help

prevent further escalation of the current problem the organization is facing.

i. Increasing competitiveness. There has been an increase in competition

within the retail industry, resulting in less downward pressure on prices (Wahba,

2016). If Simon Property Group does not respond to the price hikes, it risks losing

market share.

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ii. Exchange rate. A corporation like Simon Property Group, which has

international sales but relies on local suppliers, is can significantly be affected by

fluctuations in the currency rate.

iii. Technology development. Consumers attracted to new technologies by a few

rivals within the industry pose a threat to Simon Property Group since customers

may leave for competitors, resulting in a reduction in Simon Property Group's

overall market share.

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References

Burayidi, M. A., & Yoo, S. (2021). Shopping Malls: Predicting Who Lives, Who Dies, and Why?. 

Journal of Real Estate Literature, 29(1), 60-81.

JATMIKO, B., Udin, U. D. I. N., RAHARTI, R., LARAS, T., & ARDHI, K. F. (2021). Strategies for

MSMEs to achieve sustainable competitive advantage: The SWOT analysis method. The

Journal of Asian Finance, Economics and Business, 8(3), 505-515.

Lin, D., Mehta, T., Suradja, T., Tai, J., Tsai, K., & Vinayagam, T. (2017). Simon Says

Consulting Group BA 324 Simon Property Group November 15, 2017.

Quezada, L. E., Reinao, E. A., Palominos, P. I., & Oddershede, A. M. (2019). Measuring

performance using SWOT analysis and balanced scorecard. Procedia Manufacturing, 

39, 786-793.

Sutherland, S. (2018). The Simon/Tanger Outlet Mall Health Impact Assessment: Resulting in

Active Transportation through Community Connectivity. Chronicles of Health Impact

Assessment, 3(2), 4-14.

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Toscani, G., Tosin, A., & Zanella, M. (2018). Opinion modeling on social media and marketing

aspects. Physical Review E, 98(2), 022315.

Wahba, P. (2016). SIMON PROPERTY GROUP. FORTUNE, 174(8), 148-155.

Watson, S. (2016). What is happening to commercial malls: Evaluating contradicting opinions.